Apple prepares for battle over music, TV streaming in India after Airtel deal

Apple’s partnership with India’s second-largest telecom company gives the iPhone maker a much-needed boost in a content market where it still lags far behind Spotify and Walt Disney.

The US technology giant, which is looking to increase revenue globally from services such as apps, payments and media, will offer free music and video streaming to many of Bharti Airtel’s 281 million customers.

The deal is likely to significantly expand the user base for Apple TV+ and Apple Music in a country where Apple has long emphasized the manufacturing side of its business to diversify its supply chain beyond China.

Apple manufactures a large portion of its iPhones in India, but the devices in the country account for just six percent of the 690 million smartphones in the country, down from just two percent in 2019, according to data from Counterpoint Research.

“The move is a testament to Apple’s ambitions for India,” said Nitesh Kripalani, former head of Amazon Prime Video in India. “The strategy is a tried and tested method to catapult its presence in markets it deems important.”

In the US, Apple has offered Apple Music for free with some Verizon mobile data plans since 2019, and starting in May, Apple TV+ will be included in a streaming bundle from Comcast.

In India, Apple Music will be available to premium users of Airtel’s Wynk music app, but the app will eventually shut down.

According to a telecom industry source, who asked not to be named because the figures are confidential, around seven million subscribers get access to the ad-free version of Wynk through Airtel postpaid contracts, but only a small fraction of them actually use it.

Neither Apple nor Airtel responded to requests for comment outside regular business hours.

Music battlefield

According to Neil Shah, co-founder of Counterpoint, Apple Music is more focused on the Indian market than the mainly English-language Apple TV+, with content such as Bollywood and songs in regional languages. However, its library is smaller than Spotify’s.

Spotify has about 3 million paying users in India, Gaana 1.4 million, Wynk 500,000 and Apple Music 200,000, according to an Indian music industry source, who declined to be named because he is not authorized to disclose estimates.

Neither Spotify nor Gaana responded to requests for comment outside regular business hours.

Data from industry body FICCI and consulting firm EY shows that only about 7.5 million of the approximately 185 million users of ad-supported and ad-free apps in India last year paid for audio streaming services.

Airtel is paying Apple a per-user fee that is “significantly” lower than the $1.20 (roughly Rs 100) monthly fee that Apple TV+ and Apple Music charge in India, the telecom industry source said.

In return, it will save millions of rupees in licensing fees as it seeks to close Wynk and use Apple Music to boost revenue and improve customer loyalty, a second telecom source said.

“Airtel realised that its strength lies in distribution, not in content creation,” said the source, who requested anonymity because they were not authorised to discuss the matter.

Video streaming

Apple is a small player in Indian video streaming, with Counterpoint estimating it has less than 1 million users. Disney+ Hotstar is the market leader with 38 million users, while estimates showed Netflix has around 10 million users.

Netflix has repeatedly stated that it is targeting 100 million users, without setting a time frame as to what the market potential is.

Apple TV+ is known for original series like “The Morning Show” and “Slow Horses,” but competitors like Netflix and Disney offer more Hindi content featuring Bollywood actors and even regional language films.

Disney and Reliance Industries’ JioCinema also stream cricket, India’s most popular sport. The two companies are combining their Indian media businesses to create the country’s largest entertainment company.

Airtel, which is second only to Reliance Jio in terms of subscribers, is planning to offer packages that include free access to Apple TV+ for a few months, the second telecom source said.

This will bring Apple TV+ to more households, but growth could be hampered because the “local offering is not yet as strongly optimized,” according to Counterpoint’s Shah.

© Thomson Reuters 2024

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